Consumption Is Not Returning to Bubble Levels

The NYT did a piece on the prospects for consumer spending in 2012. It listed a number of reasons why spending would be "tepid." Actually, spending is not tepid, it is actually quite high relative to disposable income as noted by one of the sources in the article.

In the pre-bubble years, savings averaged more than 8.0 percent of disposable income. The saving rate fell sharply due to the wealth effects associated with the run up of stock prices in the 90s and house prices in the 00s. With...